Don Goldstein learned a classic lesson when he joined an insurance company in the mid-1990s as vice president of IT. He
inherited a data warehouse project intended to mesh information across divisions to provide a complete look at each customer.

"This would be the thing that finally gave everyone what they had been looking for," Goldstein recalls. "Namely, how do we get
all of our information to mean something?"

But too much data needed too much cleansing, he says, and the project plan allowed many months between deliverables. Along the
way, business groups argued about who should update which information.

"It just got way, way out of hand," he says. "It cost too much, took too much time. It didn't have a hope to work."

A data warehouse was finished, but for just one business unit. Users still had to ask IT to generate their reports. The
project died soon after being delivered to the business unit, when key project members left and funding dried up.

The lesson he learned, of course, is that you can't boil an ocean. Ever after,
says Goldstein, who is now CIO of CB Richard
Ellis, a $5 billion commercial real estate services company, his projects have had narrow and specific milestones managed by a
group of IT and business people, each accountable for different aspects of the work.

"It seems simplistic, looking back," he says. But the failure so affected him that he avoids the term "data warehouse." "So
ominous," he says. You can almost see him shiver.

How you respond to failure—or any event that doesn't go as expected—shapes how you handle the next one. Early in
her career, Twila Day, CIO of the $37.5 billion Sysco food service company, had to find the skills and inner strength to
handle a negative boss. She's since
applied the lesson to deal with negative people generally. "You learn more when something goes wrong than when everything goes
right," she says.

Surviving failure not only teaches lessons but builds resiliency—a trait critical to handling the uncertainty we face
today. In this economy, which yet shows no signs of great and lasting recovery, you want tested leaders cool enough to handle
difficult, unpredictable days. Someone who has never failed is half as valuable as someone who has endured a "humbling
experience" and learned from it, says John Puckett, DuPont's CTO of
corporate IT and CIO of central research and development. Puckett's 42-year career includes the CIO post at
Toysmart.com (a casualty of the dotcom bust) as well as vice president and general manager at Polaroid (whose business model
was overtaken by the rise of digital cameras). "You better hope your leaders have failures under their belts," he warns.

But failing now, however educational, could put your job and even your company at risk. With recent cuts in budgets and staff,
choosing to do one project may mean choosing not to do another; mess it up and you let your company down twice.

Meanwhile, in some circumstances, failure may be beyond your control, yet you may have to clean it up anyway, notes Robert
Fort, CIO of Virgin Megastores North America. The company is closing all of its U.S. music stores because renting the real
estate they occupy can generate more money for its owner than the retail outlets can, Fort says. Learning how to shut down a
collapsed company is a new experience for him, he says. "I have the desire to do this with integrity."

He knows that how he handles failure will determine his future as a CIO.

Read Your People Carefully

Faulty management of a PeopleSoft Financials project in 1997 is a mistake Steve Hanna can't forget. At the time, he was CIO of
Host Marriott Services, a company that supplied concessions to airports and other venues.

To lead the implementation, Hanna and the company controller chose two up-and-comers: one from IT and one from the
controller's staff. The team hired a good integrator to help, they held weekly status meetings and everything appeared to be
going right, Hanna recalls.

But underneath, much was wrong. The day a critical piece was due, the duo told Hanna it wouldn't come in. "I asked, 'How far
away are we?' They said, 'We don't know.'"

IT failures, like plane crashes, typically happen after a sequence of small problems culminate into a large, visible
breakdown, says Michael Krigsman, president of Asuret, a consultancy that specializes in helping companies avoid project
failures. "Usually there was a triggering event and multiple other steps along the way that also failed," he says.

Even after Hanna and the two managers spent the next weekend dissecting their project documents and reports, as well as which
code and modules had been developed, they couldn't figure out what had happened. "We ended up redoing the entire project."

All along, it turns out, the project managers hadn't disclosed problems. They'd hint at trouble, saying, for example, that
they were late testing a piece of code but would make up the time on the weekend. But Hanna, who is now CIO at Kennametal,
missed the warnings. He says he should have sniffed out what they weren't saying by asking probing questions and watching body
language.

"When you have executives trying to make a name for themselves, you have to fly low to the ground with them," he says. "It was
probably the biggest mistake I've made in my career."

Sometimes you think you've put the right people in place only to find out you misjudged them, says Christopher Barron, SVP and CIO of
CPS Energy, a $2.2 billion energy and utilities company.

Last year, CPS Energy wanted to build a mobile application portfolio to give executives and key staff members access to
corporate financial and operational data via smartphones and laptops. Barron
assigned a tech whiz to the project who alienated the company's senior executives with his arrogance.

"This person was unwilling to admit there were kinks that needed to be tuned and had burned relationships with people," he
says. The project failed, Barron says, but not the effort. The company learned which technologies worked and has now put the
application in production.

Barron also learned that he needed a different kind of project leader. He reassigned the techie to an R&D position, from which
he hands off implementation to someone else. To interact with the company's CEO, CFO and chief risk officer on the new system,
Barron tapped top desktop and network support staff specially trained to work with business executives. These staff members
have undergone advanced conflict resolution training and learned how to address executives respectfully. They've also been
taught to use body language to appear approachable, and they even wear a uniform: slacks and a company logo shirt. "Jeans and
an untucked shirt don't give you gravitas with executive customers," Barron says.

Being upfront about his missteps helped Barron convince his C-level peers to go ahead with a new iteration of the project, he
says. Owning mistakes enhances a CIO's reputation, he says.

In Hanna's case, he admits he picked inexperienced project leaders and didn't watch them closely enough to "hear the
unspoken." Now he asks for actual—versus expected—results, supported by details and evidence. He has also
sharpened his senses. "I wander around and talk to people in general, not just about the project, and see if they laugh or
avoid eye contact," he says. A good CIO can "pick up more in a five-minute conversation at the coffee station than at an
all-day project debriefing."

When that PeopleSoft project went bad, Hanna had to tell his boss­—the CEO—that it would be months late and cost
"a lot more money" than budgeted. The project managers, he says, soon quit to consult. Hanna, meanwhile, lost a bonus riding
on the project's success. The CEO noted the events in a performance review. "His comment was, 'I hired you as a thought leader
and you let me down,'" Hanna recalls. "It cut really deep."

Know When to Quit

If taking failure personally burnishes the lessons, taking it too personally destroys the chance to learn. In a dysfunctional
environment, such as in a department led by a bad boss, it can be hard not to succumb, says Day, Sysco's CIO. She was laid off as
a young programmer. Without the finances to be picky, she resolved to take the first offer she got. Her new boss apparently
thought little of her.

"He didn't believe females should be in IT," she says. "He would say, 'You can't do this job, you're not smart enough.'"
At first, she disliked going to work: "A negative, almost depressing situation," she recalls. Then she decided to disprove his
barbs, absorb as much knowledge as she could and get out. Among the lessons she learned, she says, was not to waste energy
trying to change other people. It's best to learn as much from a bad situation as you can and move on.

Quitting on a project, however, can be more difficult because afterward, you're stuck amid the financial, political and
personal consequences.

As a result, the wherewithal to stop a project often doesn't exist, says consultant Krigsman. He was recently hired by a
client to evaluate a troubled project. In a meeting with the IT and business staff, the sponsor—an executive vice
president—asked when the team would achieve a given milestone. In these situations, denial and fear often prevent
changing direction until after the project has become a public spectacle.

"He looked around and there was silence," he recalls. "I knew there was no way on God's green earth this milestone could be
achieved in any reasonable time frame." The sponsor called on Krigsman, who told him the bad news.

"When the team is scared to tell management the truth and feels that their jobs may be in jeopardy, the conditions have been
created for denial to blossom, and failure is almost assured," he
says.

John Halamka, CIO of Beth Israel Deaconess Medical Center, tries to prevent a punishing atmosphere that could spur staff to
hide mistakes. During a major
network outage in 2002, doctors and lab technicians couldn't access patient charts or test results and 100 temporary
workers had to hand-carry records around campus. Yet no one pointed fingers at specific people.

Rather, Halamka and his staff examined which processes and technology allowed the problem to develop. They learned they needed
to institute thorough downtime procedures and invest $2 million to upgrade networking gear and, later, $5 million to build
redundant data centers.

Looking at trouble as a process failure and not the fault of one person "gives us the freedom to diagnose and treat
ourselves," he says. "We become very transparent about what our organization's strengths and weaknesses are."

CB Richard Ellis's Goldstein says IT managers must stop wayward projects before they cause damage, but no one likes to give
up.

"Sometimes it's easier to try to keep momentum going, try to get more funding and resources," he says. "You assemble a team, a
budget, what you believe are achievable objectives. You make commitments. The last thing you want to do is not live up to
them." (See "To Avoid Failure, Define Success")

One way he now guards against the pressure to keep going in the face of sure failure is by building a project team from a
variety of business sponsors, end users and IT staff. Included are a couple of managers with the rank to kill a project. A
subject matter expert at the vice president level or higher, he says, has the pull to refocus or even stop work that goes off
the rails or no longer makes sense when business goals change.

"It takes both courage and some political capital to stand up and say, 'We've made a mistake.'"

Understand the Risks

Scientist, inventor and statesman Benjamin Franklin might be history's most successful mistake maker. He was clonked on the
head by the whirling blades of a fan attached to a rocking chair he built and exhausted himself wearing his own wooden swim
paddles. Franklin's self-cooling rocker never took off and the paddles were too heavy for swimming. But his flying a kite in a
thunderstorm led to harnessing electricity, and his help orchestrating the American Revolution turned out okay.

In all, he amassed an impressive record in his 84 years and advised, "Do not fear mistakes. You will know failure. Continue to
reach out."

Easy for Ben to say; no one ever laid him off.

Still, says Barron, if you're not making fruitful mistakes, you're not taking enough risk. Risk, after all, brings progress.
Barron's project to create mobile, roaming, overseas access to the company's financial data is one example. "We threw away six
figures but we learned exactly what we needed and we could buy exactly what we needed when it was available," he says. The
company built its now-working system on NetMotion's mobile VPN software and Cisco's Soft Token authentication product.

"I have a couple kids and don't want to be out on the street. But I'm not doing my job if I don't experiment," he says.

Yet evaluating risk with a backdrop of multitrillion-dollar bailouts and the biggest unemployment numbers in two decades takes
special focus, says Beth Israel's Halamka.